Many of our clients are surprised by just how good they feel after declaring bankruptcy. Not that filing for bankruptcy is an easy decision; on the contrary, the decision to discharge your debts should only be undertaken with care and consideration, not to mention consultation with an experienced Florida bankruptcy attorney.
When I discuss an Orlando Chapter 13 bankruptcy plan with new clients, the first question that they ask is: “How much is my monthly payment?” The answer depends on why they are filing Chapter 13 bankruptcy in the first place. Each Chapter 13 payment plan is specific to the person and their particular financial situation. Determining how much you must pay in a monthly payment is a case by case determination. Here are some of the rules that apply to every Orlando Chapter 13 bankruptcy plan:
A Chapter 13 and second mortgage lien can be a great combintation. If the balance of the first mortgage is higher than the fair market value of the home, the homeowner can “strip” the second mortgage lien. This means that after the homeowner successfully completes a chapter 13 bankruptcy plan, the second mortgage lien will be stripped, or entirely removed from the property. The debt that is secured by the second mortgage lien is paid as an unsecured debt (like credit card debt) during the chapter 13 bankruptcy plan. At the end of plan, any remaining unpaid balance is completely discharged, or eliminated. The result of this is that a homeowner is able to completely eliminate a seccond mortgage lien on thier home by completing a chapter 13 bankruptcy. Owners of investment property may also get this relief.
Orlando residents who are considering filing chapter 7 bankruptcy should know the rules that apply to their financial transactions. Filing chapter 7 bankruptcy is based on a very simple agreement with the Orlando bankruptcy court: you will receive an almost immediate discharge of all your debts, in exchange for your agreement to surrender to the court your non-exempt property. Now, most people who are filing chapter 7 bankruptcy in Orlando do not have to surrender any property. That is because Florida law provides exemptions that protect the debtor’s property from having to be surrendered. Please read my other postings on this blog that discuss what you get to keep in a chapter 7 bankruptcy. However, for individuals and families that have more property than the exemptions allow, there are rules that apply to financial transactions that occur before filing chapter 7 bankruptcy. These rules are designed to prevent a person from “hiding” non-exempt property and then simply getting it back after bankruptcy to avoid having to surrender it to the court.
Chapter 7 bankruptcy is the fastest legal way to discharge unmanageable debt. However, many people who come to me for advice on filing bankruptcy are surprised to learn that they earn too much income to qualify for this form of debt relief. This week, I spoke with a gentleman who was a perfect candidate for a chapter 7 bankruptcy: a recent divorce has left his personal finances in disarray, with a mortgaged house that neither he and his former wife can afford to pay. However, this father of one earns $85,000.00 a year – too much income to qualify for chapter 7 bankruptcy.